Chapter 4:

U.S. and International Research and Development: Funds and Alliances


There was a resurgence in R&D investment in the United States in the mid-1990s. A prosperous economy has invigorated companies in both the manufacturing and service sectors, enabling them to allocate more resources toward the discovery of new knowledge and the application of that knowledge in the development of new products, processes, and services. An upsurge in innovation is further contributing to a buoyant economy.

At the same time that the private sector's role in maintaining the health of U.S. R&D enterprise has been expanding, the Federal Government's contribution has been receding, as the federal share has become less prominent in both the funding and the performance of R&D. As a result of these two divergent funding trends, the composition of the nation's R&D investment is slowly shifting. For example, recently, a growing percentage of the nation's R&D total has been directed toward nondefense activities. While industry has focused its R&D on new product development, the Federal Government historically has been the primary funding source for basic research activities.

Although more positive than negative indicators of the health of R&D funding have appeared in recent years, there is some cause for concern that short-term R&D may be displacing the longer term quest for new knowledge and breakthrough discoveries. To compensate for what may be a recession in long-term fundamental research, new trends have been emerging. Greater reliance is being placed on the academic research community, and all sectors have expanded their participation in a variety of domestic and international partnerships both within and across sectors. The rapid rise in global R&D investments is evident from the expansion of industry's overseas R&D spending and the even more rapid rise in foreign firms' R&D spending in the United States. These domestic and foreign collaborations permit performers to pool and leverage resources, reduce costs, and share the risks associated with research activities. In addition, such alliances and international investments open a host of new scientific opportunities for R&D performers, enabling them to accelerate the exploration and deployment of promising new research and technologies that undoubtedly will be the source of tomorrow's new products and services.

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